The 2025 Budget has delivered major and highly anticipated updates to the Enterprise Management Incentive (EMI) regime, changes that will extend eligibility to more growing companies and give employers greater flexibility in how they reward and retain key talent.
These reforms will expand the reach and lifespan of EMI options, doubling the value of shares that can sit under option and providing an additional five years before expiry. For high-growth businesses where long-term exits or liquidity events are expected, these changes could significantly enhance planning certainty and incentivisation strategy.
More companies will qualify to grant EMI options
EMI options are a tax-efficient form of employee share incentivisation, offering exemption from income tax and National Insurance contributions on exercise (subject to conditions) and often favourable capital gains tax treatment on disposal.
From 6 April 2026, the following enhancements will apply:
| Current rules | New rules (from April 2026) |
| Gross assets must not exceed £30m | Increased to £120m |
| Up to 250 FTE employees | Increased to 500 employees |
| EMI option pool capped at £3m | Increased to £6m |
| Options must be exercised within 10 years | Lifespan increased to 15 years |
What this means
- Fast-scaling companies will retain EMI eligibility for longer
- Businesses previously exceeding the threshold can now benefit
- Early-stage firms won’t be pushed out of the regime as they grow
Longer option lifespan, a boost for exit-based schemes
The extension of the option life to 15 years is particularly important for companies operating “exit-only” structures, where options vest and are exercised only in connection with a sale or IPO.
Under current rules, if no exit occurs within 10 years, options risk lapsing, often leaving employers with the challenge of renegotiating alternative incentive mechanisms. The additional five-year window should significantly reduce administrative burden and provide greater opportunity for value to be realised.
Notably, existing EMI grants can be amended to adopt the longer 15-year period without losing tax-advantaged status, giving companies an immediate planning opportunity ahead of April 2026.
How this applies to employers
These updates broaden access, extend planning horizons, and enhance the long-term attractiveness of EMI as a retention and reward tool.
For growth-oriented businesses, particularly those anticipating future sale or investment, EMI may now provide even greater strategic benefit.
Next steps
Abbiss Cadres advises businesses on EMI design, eligibility, tax treatment, scheme drafting and implementation. If you currently operate EMI options, are scaling rapidly, or want to explore share incentives for the first time, now is the ideal time to review your structure ahead of the April 2026 changes.
Our specialists consult and advise on all forms of employee share ownership.
Get in touch today to assess your eligibility or get any questions you have answered.
